The impact of government policy on Chinese investment locations: An analysis of the Belt and Road policy announcement, host-country agreement, and sentiment

Filip Beule () and Haiyan Zhang
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Filip Beule: KU Leuven
Haiyan Zhang: Neoma Business School

Journal of International Business Policy, 2022, vol. 5, issue 2, No 4, 194-217

Abstract: Abstract In today’s turbulent geopolitical landscape, scholars and policymakers have paid growing attention to the influence of geopolitics on foreign direct investments. We contribute to this literature by analyzing how the institutional and policy context influence Chinese greenfield investments in the context of the Belt and Road Initiative (BRI). As there is no consistency in host countries regarding China’s unilaterally announced BRI, we have investigated how host country policy agreement and sentiment have influenced their receptiveness and attractiveness to Chinese investors. We show that (1) a positive public opinion towards the BRI in the host country and (2) an official BRI Memorandum of Understanding between China and a host country both stimulate Chinese greenfield investment in a host country. We also find that these effects are disproportionately larger for Chinese state-owned enterprises than for private firms. Finally, we show that institutional distance negatively moderates these two effects.

Keywords: belt and road initiative; Chinese Outward FDI (OFDI); investment policy; public opinion; State Owned Enterprise (SOE); institutional distance (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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DOI: 10.1057/s42214-021-00129-2

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